June 11, 2019 | Social IN-Security

Sean Brodrick

Sean is the natural resource analyst for Weiss Group. You can read his thoughts on gold, oil, cannabis, uranium and other natural resources at EdelsonInstitute.com

Relying on Social Security for retirement? That could be the biggest mistake of your life.

First, Social Security benefits have lost a whopping 33% of their buying power since 2000, according to a new report from the nonpartisan Senior Citizens League.

And even though recipients saw a fairly generous cost-of-living adjustment (COLA) in 2019, it was negated by expenses rising even faster.

Second, Social Security is facing a significant shortfall. Come 2034, the trust fund is only expected to collect enough in taxes to pay about 79% of scheduled benefits.

Third, you may be surprised to hear that Social Security was never even meant to function as a sole source of income for seniors.

The Social Security Administration itself says it will replace only 40% of the average worker’s pre-retirement income. But most seniors need double that amount — around 80% — just to pay for basics like housing, food, transportation and healthcare.

Look at the numbers:

The typical Social Security recipient now receives benefits of around $1,360 a month, or $16,320 a year. A dual-income household, therefore, might collect $32,640.

Now look at the costs:

Healthcare. A healthy 65-year-old couple today can expect to spend $377,000 on healthcare in retirement. That’s at least $18,850 per year over 20 years. (And many seniors live much longer!)

Housing. About 30% of seniors 65 and over carry mortgage debt. But even if your home is paid off by retirement, you still have maintenance costs. At roughly 4% of an average home’s value each year, you can expect to spend $15,528 a year on your home.

Transportation. Just because you’re no longer commuting for work, you still need get around town and visit the grandkids. Transportation costs for retirees average $6,852 per year.

Food. The average senior household forks over $5,508 on food in a year. This figure includes $170 a month dining out. But even if we replace that with 100% home cooking, we’re still talking around $4,140 a year.

Clothing. While you may not need much in the way of business attire, you can still expect to spend about $1,417 at your local department store.

Adding it all up, we arrive at a minimum of $46,787 …

… meaning you’re ALREADY $14,147 in the hole.

And you’re STILL lacking things like basic cable, internet and cell phone service. Not to mention all those vacations and country club memberships you were looking forward to!

And while you can take steps to lower living expenses, by downsizing, relocating, or taking other drastic measures …

There is a better way.

Grow your nest egg now

The Economic Policy Institute reports that 41% of baby boomers aged 55 to 64 have no retirement savings at all. If you’re part of that statistic, then you need to step up your retirement contributions now.

If you invest wisely, you’d be surprised how large a nest egg you can amass.

And even if you’re already retired, you still have the power to turn things around.